Exxon Valdez Oil Spill and Exxon's Response

Expertise in earth sciences is vitally important to a lot of modern businesses, especially those involvedin oil production or transportation, industrial manufacturing, or different industries that release waste or by products into the surrounding environmentor water.

The fact that massive punitive legal damages have been enforced by courts to huge corporations such as Exxon, Union Carbide, and Pacific Gas and Electric brings notice upon organizations that their only survival can well be related upon how their staff respond to earth science related incidents

In an effort to implicate the much importance of the earth sciences to modern corporate organizations, a study of the massive 1989 oil spill in Prince William Sound and how it affected Exxon would be useful. The environmental damage was unprecedented, and initial public anger against the corporation was at very high levels, however Exxon Mobil managed to weather the storm and continue to do business, in large part because of the efforts of its own earth sciences employees.

The problems all started on March 24, 1989 at four minutes after midnight, when the enormous oil super tanker Exxon Valdez struck a reef hidden under the pristine surface of Alaska’s spectacular Prince William Sound and started spilling vast amounts of crude oil into the sea. In the Alaskan darkness that spring night an environmental nightmare started that changed not only Prince William Sound itself, but the whole world, especially the business world.

In the first weeks after the disaster, according to the advice of their own earth sciences people, who understood all very well how much environmental damage might ensue, Exxon volunteered to spend whateverall the money was necessary on cleanup efforts and assessments of environmental damages after the accident and before the settlement. Over 2 billion dollars was ultimately spent by Exxon on these efforts, and the company’s PR people used every opportunity to publicize the amount being spent, and to repeatedly stress that it was voluntary, so everyone would be aware of that fact and appreciate that Exxon was meeting its responsibilities to the public for the damage done to the environment.

Despite these efforts, nothing could stop the flood of lawsuits which resulted from the spill. After anightmarish thirty months of devastating bad publicity for Exxon, and extremely serious financial losses, a legal settlement agreement was finally reached on October 8, 1991 between the plaintiffs—the State of Alaska and the US government—and Exxonattorneys on both criminal charges and civil damage claims stemming from the incident.

In settlement of civil charges, Exxonagreed to pay the State of Alaska and the United States over nine-hundred million dollars over a 10 year period. This money would be used for environmental and wildlife restoration and would be administered by 6 government trustees; 3 of them federal appointees, and the other 3 state appointees.

In settlement of criminal charges, it was agreed that Exxon would pay two-hundred and fifty million dollars. Two restitution funds of fifty million dollars each were established, one under state control and one under federal authority. Against strong opposition from many Alaskans, 100 and 25 million dollars of the balance was forgiven due to Exxon’s cooperation during the cleanup, and because of the upgraded and highly-publicized safety procedures Exxon earth sciences staff had designed to prevent a reoccurring similar event. The remaining 50 million dollars was divided between the Victims of Crime Act account and the North American Wetlands Conservation Fund.

But another big setback was in store for Exxon. On September 16, 1994, an angry jury in a U.S Federal courtroom returned a stunning 5 billion dollar punitive damages verdict against the corporation. Exxon attorneys have fought this judgment in appeal after lengthy appeal over the last seven years, and on November 7, 2001 won a major victory when United States Court of Appeals justices threw out the 1994 punitive damages verdict.

But Exxon has suffered mightily since the Exxon Valdez went aground in Prince William Sound that fateful night in 1989, and it is not an exaggeration to say that the existence of the corporation has been at stake. Any business, no matter how large or small, is at the mercy of public approval, for it needs public approval to sell its products or services. And in Exxon’s case, public approval has been very much dependent upon what the corporation’s earth sciences people have been able to say and do to persuade the public that the environmental damage to the Alaskan coastline is nowhere close to being as bad as other earth scientists have claimed.

In the twelve years since the oil spill, Exxon has relied heavily upon their own earth sciences department’s employees, and hired outside earth sciences consultants to defend themselves against charges that they are liable for billions of dollars in environmental damage to the ecosystem of Prince William Sound.